Tax Analysts Blog

The Taxpayer Advocate Speaks ... So Listen Up

Posted on Jan 13, 2012

Do you pay U.S. federal taxes? If so, did you know you have an official National Taxpayer Advocate? That's correct, somebody in-the-know who looks out for our collective interests as taxpayers. It's her job to loudly cry foul when something about our tax system isn't right and needs fixing.

The current National Taxpayer Advocate is Nina Olson. She recently issued her annual report to Congress which cites the 22 biggest problems that U.S. taxpayers face when dealing with the IRS. You can access Olson's report by clicking here.

What issue came in at number one? The survey says ... "The combination of the IRS's expanding workload and the limited resources available to handle it." Perhaps not what you were expecting, but Olson is on to something here.

Congress is in the habit of passing legislation without thinking much about how the new law will be enforced. Congress often compels the IRS to perform new and different tasks without giving the agency the budgetary resources to fulfill its expanded mission. Sometimes Congress even adds work to the IRS's plate while cutting it's budgetary resources. Some lawmakers seem to think it's clever to defund the IRS, as if that were a back-handed way of cutting taxes or shrinking the size of government. For the record, that's extraordinarily foolish and irresponsible.

First, the IRS does not write the tax laws or set the tax rates. It merely enforces laws that Congress passes. If you resent paying taxes, do not blame the IRS. That's like blaming a compass for pointing north.

Second, if members of Congress want to lower our taxes, they should do so directly. Personally, I would applaud the move since I appreciate lower taxes. But in no way is it prudent to say you're going to ease my tax burden by making the agency responsible for enforcing the Internal Revenue Code less competent, less efficient, and less responsive. That's like saying the speed limit needs to be changed, but instead of dealing with it directly you're going to force the police to wear blindfolds and ride tricycles. It doesn't solve the problem at all; in fact it only creates more problems.

You might argue the money we spend on the IRS is a legitimate target for spending cuts given the size of the federal budget deficit. But keep in mind that every $1 dollar Congress appropriated for the IRS during 2011 generated $200 in revenue. (That's also in Nina Olson's report.) Talk about a multiplier effect.

So far as I know, the IRS is the only federal agency for which the deficit gets smaller the more funding we throw at it. Budget hawks take note; if we're serious about reducing the deficit we might want to invest more in the IRS.

Bottom line: An under-funded and poorly functioning revenue agency is NOT a substitute for a tax cut. And enforcing the laws already on the books is NOT a tax increase.

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